The Reserve Bank of India (RBI) announced on Wednesday its intention to ease capital requirements for banks, a move aimed at enhancing their ability to lend and engage in productive activities. RBI Governor Sanjay Malhotra stated that banks will be allowed to include their quarterly profits in the calculation of their capital-to-risk-weighted assets ratio (CRAR) without the previously imposed condition of maintaining a certain level of provisions for non-performing assets (NPAs). This change is expected to facilitate greater liquidity in the banking sector. Additionally, the RBI plans to eliminate the requirement for banks to maintain an investment fluctuation reserve (IFR), which serves as a buffer against investment depreciation. This decision is based on the assessment that banks already adhere to capital charges for market risk and follow updated norms regarding investment portfolios. The RBI also intends to review the norms for matters requiring board approval to promote effective governance. The central bank will issue draft circulars for public feedback on these proposals, while the monetary policy committee has kept the interest rates unchanged at 5.25%.